San Diego City Council adopts pension reform measures

San Diego - The San Diego City Council voted unanimously Tuesday
to endorse or implement many of the recommendations made by the
Pension Reform Committee aimed at overhauling the city's
debt-ridden pension system.

The nine-member committee was appointed last year to scrutinize
the San Diego City Employees' Retirement System, which has a $1.15
billion deficit and $545 million in unfunded retiree health care
costs.

Mayor Dick Murphy called the action a "milestone," and said San
Diego is "moving forward to solve what is a long-term problem in a
constructive, decisive and productive way."

The committee made 17 recommendations to fix the problem,
including:

Infusing $600 million into the plan over the next three fiscal
years, with no less than $200 million in the 2005-2006 fiscal
year;

Requiring a 15-year amortization period;

Requiring a five-year amortization period on any new
benefits;

Raising the retirement age by seven years;

Changing the way pension benefits are calculated;

Halting the funding of payments for retirement health care
benefits through the pension plan;

Eliminating the city's deferred retirement program;

And restructuring the Retirement Board to exclude city
employees, union representatives or participants in the pension
system.

Four recommendations by the Pension Reform Committee have
already, at least partially, been advanced by the City Council.

In July, the panel initiated a plan to issue at least $200
million in pension obligation bonds this fiscal year. The city has
already put $130 million into the plan this year.

They council also previously agreed to place two ballot measures
before voters to restructure the way the $3.2 billion retirement
system is managed.

The first, Proposition H, would change the makeup of the
Retirement Board, but does not decrease the number of board members
or exclude all city employees and retirees from serving as
recommended by the committee.

A second, Proposition G, would require the adoption of
amortization schedules similar to those recommended.

The City Council agreed to direct the city manager to begin the
meet and confer process with the city's four labor unions to
implement the recommendations related to pension benefits,
eliminating the deferred retirement program and upping the
retirement age.

An expert labor advisor will be hired by the city manager to
assist city staff in the early labor negotiations.

To help plug the pension debt, Murphy recently called for early
labor negotiations and a two-year salary freeze for all city
employees.

Joan Raymond, president of AFSCME Local 127, which represents
about 2,300 blue collar city workers, said the union would not
support Murphy's salary freeze proposal, but would be "willing to
listen."

The San Diego Municipal Employees Association, representing
about 6,000 white collar workers, announced yesterday that it had
agreed to early contract negotiations with the city.

Murphy said the salary-freeze save about would save the city
$60-$80 million a year and have "an immediate impact" on the
pension fund's deficit.

The council also agreed to adopt the Pension Reform Committee's
plan to establish a committee by Oct. 30 to review the disability
retirement system and provide a status report by Jan. 15.